Coal Ministry Should Import All Coal For Power Sector, Say Sources

With overseas shipments becoming increasingly necessary to meet the burgeoning power demand in the country, centralised import for all electricity utilities by the coal ministry should be done as it would bring efficiencies and reduce cost, sources said.

Two sources with knowledge of the matter said a view emerging in the power ministry is that the coal ministry should take the complete responsibility of imports of the dry fuel to tide over the shortage.

Power generating companies can give their monthly requirement to the coal ministry, which in turn can direct Coal India to become the nodal agency for all imports, they said.

Coal India Ltd has in recent days floated tenders to import coal to supplement its supplies. States and power producers have also been asked to do the same. This job can be singularly handed by Coal India.

Sources said the entire process needs to be standardised and streamlined so that coal requirement is met without any delays or fears of power outage.

"Coal ministry and Coal India have the expertise and the experience when it comes to coal. Hence they should take the responsibility of importing coal on behalf of the entire power sector and provide arrangements for delivery of coal upto the plant," said a source.

The bulk order of coal will also provide a better bargaining power to the country and help reduce costs, he said, adding this in turn will help generating companies bring down the cost of power production.

Currently the onus of coal imports lies with individual power producing companies. "A combined month by month order under supervision of Coal India can address this issue for the long term," another source said.

Coal India is the expert on the subject and should bear the larger chunk of responsibility of coal logistics and gencos should focus on power generation. Given the present scenario, the expertise of an agency like Coal India is crucial for the Indian power sector, he said.

Coal India Ltd accounts for over 80 per cent of domestic coal output.

In the wake of an unprecedented demand for electricity amid an intense heat wave depleting India's coal reserves, the government asked power plants on April 28 to use 10 per cent imported coal for their power generation requirements.

The power ministry followed through with another notice on May 18, saying domestic coal allocations to power companies will be reduced from July if they do not start using 10 per cent imported coal by June 15.

India's FY23 coal imports are expected to be a sizeable 186 million tonnes. Of this, 130 MT is non-coking coal, which is mainly used as thermal coal for power generation.

Earlier this month, for the first time ever, Coal India issued a tender for purchasing imported coal for power generating companies (gencos) in the wake of the Centre directing it to meet the shortfall in the domestic coal supply chain.

It has called for bids to supply 2.4 million tonnes (MT) of coal to be delivered for the July to September 2022 period.